Accounting Policies of Aqua Logistics Ltd. Company

Mar 31, 2012

A. Basis of preparation of financial statements:

The financial statements of the Company have been prepared in
accordance with Generally Accepted Accounting Principles in India
(GAAP). The Company has prepared these financial statements to comply
in all material respects with the Accounting Standards notified under
the Companies (Accounting Standards) Rules, 2006, (as amended) and the
relevant provisions of the Companies Act 1956. The Financial Statements
have been prepared on an accrual basis and under the historical cost
convention. The accounting policies adopted in the preparation of
financial statements are consistent with those of previous year, except
for the change in reporting and disclosure policies explained
hereunder.

During the year ended March 31, 2012, the revised Schedule VI notified
under the Companies Act, 1956, has become applicable to the Company for
the preparation and presentation of its financial statements. The
adoption of revised Schedule VI does not impact recognition and
measurement principles followed for preparation of financial
statements. However it has significant impact on presentation and
disclosures made in the financial statements. The Company has also
reclassified the previous year figures in accordance with the
requirements applicable in the current year.

c. Use of Estimates:

The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported balances of assets and liabilities and disclosures relating to
contingent liabilities as at the date of the financial statements and
reported amounts of income and expenses during the period.

Although these estimates are based upon the management's best
knowledge of current events and actions, actual results could differ
from those estimates. Appropriate changes in estimates are made as the
Management becomes aware of changes in circumstances surrounding the
estimates. Changes in estimates are reflected in the financial
statements in the period in which changes are made and if material
their effects are disclosed in the notes to the financial statements.

d. Revenue Recognition:

Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
readily measured. Income from operations mainly comprises of Income
from the following heads namely International Freight Forwarding,
Customs House Agency works, Warehousing etc, representing the gross
value of services rendered by the company to its customers. It also
includes income from foreign branches which are based on the statement
of accounts received from the agents. Income is accounted when service
is completed in accordance with the contracts entered into with the
customers.

Interest is recognised using time proportion method based on the rates
implicit in the transaction. Interest income is included under the head
"Other Income" in the Statement of Profit and Loss.

e. Fixed Assets:

Fixed Assets are stated at acquisition cost less accumulated
depreciation and impairment losses if any. Direct costs are
capitalized until the fixed assets are ready for use. Computer
equipment includes bought out software.

Capital work in Progress is stated as Cost.

f. Depreciation and amortization:

Depreciation on fixed assets is provided under the straight line
method. The depreciation rates prescribed in Schedule XIV to the
Companies Act, 1956 are considered as the minimum rates. Depreciation
on additions to fixed assets has been calculated on pro-rata basis.
Individual low cost assets (acquired for Rs. 5,000/= or less) are fully
depreciated in the year of acquisition. The Company has used the
following rates to provide depreciation

g. Impairment of Assets:

The carrying amount of assets are reviewed at each Balance Sheet date
if there is any indication of impairments based on internal and
external factors. An impairment loss is recognized whenever the
carrying amount of asset exceeds its recoverable amount. Recoverable
amount is the greater of the assets' net selling price and the value
in use. In assessing the value in use the estimated future cash flows
are discounted to their present value at the weighted average cost of
capital.

h. Inventories:

The company is in the business of rendering services and hence does not
hold any inventories.

i. Foreign Currency Transactions:

i. Transactions in foreign currency are recorded at the rates
prevailing on the date of the transaction. Gain / Loss on exchange due
to fluctuation in exchange rate arising out of payment / realization
during the year has been dealt with in the Statement of Profit and
Loss.

ii. Monetary assets and liabilities denominated in foreign currency
other than Bank balances with Euram bank held in U.S. Dollars as at the
balance sheet date are translated at the exchange rates prevailing at
the year-end. As a matter of prudence exchange gain on restatement of
Bank balances in Euram bank has not been recognized due to subsequent
and anticipated deployment in the same currency. All other fluctuation
gains/losses on monetary assets and liabilities and the resultant
exchange differences are recognized in the Statement of Profit and
Loss.

iii. In respect of advances paid in foreign currency out of bank
balances held in overseas bank accounts towards advances for
acquisition of capital assets outside India, the Company has not
recognized exchange differences arising on account of the same to be
accumulated in long term foreign currency Monetary Items Translation
Reserve Pending completion of the acquisition of the capital asset in
accordance with the notification no GSR 913(E) dated December 29, 2011
issued by the Ministry of Corporate Affairs. The company would
reinstate the exchange gain or loss on completion of the capital asset
acquisition in the coming financial year. The same does not have an
impact of the profits of the company for the current year.

j. Investments:

Trade investments are the investments made to enhance the Company's
business interests. Investments are either classified as current or
long term based on Management's intention at the time of purchase.
Investments which are readily realizable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. Current investments are
carried at the lower of cost and fair value of each investment
individually. Long term investments are carried at cost less provisions
recorded to recognize any decline, other than temporary, in the
carrying value of each investment. On disposal of an investment, the
difference between it's carrying amount and net disposal proceeds is
charged or credited to the statement of profit and loss.

k. Employee Benefits:

Contributions to defined contribution scheme such as Provident Fund are
charged to Statement of Profit and Loss as incurred. Provision for
Gratuity is made based on estimated accrued liability as at the Balance
Sheet date. Bonus and leave encashment are provided on accrual basis.

l. Deferred Revenue Expenditure

The company had incurred expenditure towards advertisement and
publicity to the build the brand of the company in logistics space. In
the opinion of the management the benefit of this exercise is expected
to accrue over an extended period and is not exhausted in the period in
which the same was incurred. Such major expenditure has been treated as
deferred revenue expenditure and is being charged to Statement of
Profit and Loss over a period of 5 years commencing from the accounting
year 2010-11. Accordingly, one fifth of the amount held under
Unamortised Deferred Revenue Expenditure has been charged to Statement
of Profit and Loss during the year.

m. Intangible Assets:

Depreciation on Custom House Agency Licence is not being provided.
Since the company has the intention of being in business, well beyond
10 years, and the logistics business cannot be carried on without the
C.H.A licence, the useful life of the asset will exceed the rebuttable
presumption of 10 years under Accounting Standard 26 on Intangible
Assets.

n. Borrowing costs:

Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as a part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for its intended use. All other
borrowing costs are charged to revenue.

o. Taxation:

Provision for current tax is made based on the tax payable under the
current provisions of the tax laws applicable in the jurisdiction where
the income is assessable and after considering the Double Taxation
Avoidance Agreement with the respective countries. Deferred tax on
timing differences between taxable income and accounting income is
accounted for, using the tax rates and tax laws enacted as on the
Balance Sheet date.

p. Cash and cash equivalents:

Cash and cash equivalents comprise of Cash in hand, Balances in Current
account and deposit accounts (including interest accrued on deposits)
with Banks. The Company considers all highly liquid investments with a
remaining maturity, at the date of purchase, of three months or less
and that are readily convertible to known amounts of cash, to be cash
equivalents.

q. Provisions:

Provisions are recognized when the Company has a present obligation, as
a result of past events, for which it is probable that an outflow of
economic benefits will be required to settle the obligation and a
reliable estimate can be made for the amount of obligation. These
estimates are reviewed at each reporting date and adjusted to reflect
the current best estimates.

r. Contingencies:

Liabilities which are material and whose future outcomes cannot be
ascertained with reasonable certainty are treated as contingent. The
Company does not recognize a contingent liability but discloses its
existence in the financial statements. Contingent Assets are neither
recognized nor disclosed in the Financial Statements.

s. Earnings Per Share:

The Company reports basic and diluted earnings per share in accordance
with the Accounting Standard 20 issued by the Institute of Chartered
Accountants of India. Basic earnings per share are computed by dividing
the net profit or loss for the year by the weighted average number of
equity shares outstanding during the year. Diluted earnings per share
is computed by dividing the net profit or loss for the year by the
weighted average number of equity share outstanding during the year as
adjusted for the effects of all dilutive potential equity shares,
except where the results are anti-dilutive.

Mar 31, 2011

1. System of Accounting

a)The financial statements have been prepared to comply in all material
respects with the mandatory Accounting Standards issued by the
Institute of Chartered Accountants of India and the relevant provisions
of the Companies Act 1956.

b)The financial statements have been prepared under the historical cost
convention on accrual basis of accounting. The accounting policies have
been consistently applied by the Company and are in line with those
used last year.

2. Fixed Assets

Fixed assets are stated at historical cost less accumulated
depreciation and impairment losses if any. Cost comprises of the
purchase price and any cost attributable bringing the asset to its
working condition for its intended use. Capital work in progress is
stated at cost.

3. Depreciation/ Amortization/ Impairment

a) Depreciation is provided on fixed assets on straight line basis in
accordance with the rates prescribed in Schedule XIV of the Companies
Act 1956.

b) The carrying amounts of assets are reviewed at each balance sheet
date if there is any indication of impairment based on internal and
external factors. An impairment loss is recognized wherever the
carrying amount of assets exceeds its recoverable amount. The
recoverable amount is the greater of the assets' net selling price and
the value in use. In assessing value in use the estimated future cash
fows are discounted to their present value at the weighted average cost
of capital

4. Investments

Investments are classified into long-term investments and current
investments. Long term investments are carried at cost. Provision for
diminution in value of such investments is made only if such a decline
is other than temporary. Current investments are valued at cost.

5. Inventories

The company is in the business of rendering services and hence does not
hold any inventories.

6. Foreign Currency Transactions

a) Transactions in foreign currency are recorded at the rates
prevailing on the date of the transaction. Gain/ loss on exchange due
to fuctuation in exchange a rate arising out of payment / realization
during the year has been dealt with in the Profit and Loss account

b) Monetary assets and liabilities denominated in foreign currency as
at the balance sheet date are translated at the exchange rates
prevailing at the year end; the resultant exchange differences are
recognized in the profit and loss account except in case of exchange
differences arising on translation of non monetary items which form
part of Company's net investment which is accumulated in a 'Foreign
Currency translation reserve' until its disposal.

7. Employee Benefits

Contributions to defined contribution schemes such as provident fund are
charged to profit and loss account as incurred. Provision for Gratuity
is made based on estimated accrued liability as at the Balance Sheet
date. Bonus and Leave encashment are provided on accrual basis.

8. Deferred Revenue Expenditure

The Company has incurred expenditure towards advertisement and
publicity to build the brand of the company in logistics space. In the
opinion of the management, the benefit of this exercise is expected to
accrue over an extended period and is not exhausted during the period
covered by the Profit and Loss Account and such major expenditure has
been treated as deferred revenue expenditure and would be charged to
profit and loss account over a period of fve years commencing from the
current accounting year 2010-2011.

9. Share Issue Expenses

The company successfully completed issue of Global Depository Receipts
(GDRs) during the year and the expenses incurred in connection with the
said issue are adjusted against securities premium account.

10. Intangible Asset

Depreciation on Customs House Agency License is not being provided.
Since the company has the intention of being in business, well beyond
10 years, and the logistics business cannot be carried on without the
C.H.A. license, the useful life of the asset will exceed the
rebuttable presumption of 10 years under AS 26 on Intangible Assets.

11. Revenue Recognition

Revenue is recognized to the extent that it is probable that the
economic benefits will fow to the Company and the revenue can be readily
measured. Income from operations mainly comprises of Income from the
following heads namely International Freight Forwarding, Customs House
Agency works, Warehousing etc. representing the gross value of
services rendered by the company to its customers. It also includes
income from foreign branches which are based on the statement of
accounts received from the agents. Income is accounted when services
are completed in accordance with the contracts entered into with the
customers.

12. Accounting for taxes on income

a) Provision for current tax is made based on the tax payable under the
current provisions of the tax laws applicable in the jurisdiction where
the income is assessable and after considering the Double Taxation
Avoidance Agreement with the respective countries.

b) Deferred tax on timing differences between taxable income and
accounting income is accounted for, using the tax rates and tax laws
enacted as on the Balance Sheet date.

13. Borrowing Cost

Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as a part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for its intended use. All other
borrowing costs are charged to revenue.

14. Provisions

a) A provision is recognized when an enterprise has a present
obligation as a result of past event and it is probable that an outfow
of resources will be required to settle the obligation in respect of
which reliable estimates can be made.

b) Provisions are not discounted to its present value and are
determined based on best management estimates required to settle the
obligations at the balance sheet date. These are reviewed at each
balance sheet date and adjusted to refect the current best management
estimates.

15. Segment Reporting

The company is engaged in only one segment of business which is
International Freight Forwarding and Customs House Agency work the risk
and returns of which are similar.

16. Use of Estimates

The preparation of financial statements in conformity with the generally
accepted accounting principles requires estimates and assumptions to be
made that affect the reported amount of assets and liabilities on the
date of the financial statements and the reported amount of revenues and
expenses during the reporting period. Difference between the actual
result and estimates are recognized in the period in which the results
are known/ materialized.

17. Contingencies

Liabilities which are material and whose future outcome cannot be
ascertained with reasonable certainty are treated as contingent and
disclosed by way of Notes to financial statements.

18. Earnings Per Share

The company reports basic and diluted earnings per share in accordance
with Accounting Standard 20. Basic earnings per share are computed by
dividing the net profit or loss for the year by the weighted average
number of equity shares outstanding during the year. Diluted earnings
per share is computed by dividing the net profit or loss for the year by
the weighted average number of Equity shares outstanding during the
year as adjusted for the effects of all dilutive potential equity
shares, except where the results are anti-dilutive.

Mar 31, 2009

1. System of Accounting

a) The financial statements have been prepared to comply in all
material respects with the mandatory Accounting Standards issued by the
Institute of Chartered Accountants of India and the relevant provisions
of the Companies Act 1956.

b) The financial statements have been prepared under the historical
cost convention on accrual basis of accounting. The accounting policies
have been consistently applied by the Company and are in line with
those used last year.

2. Fixed Assets

Fixed assets are stated at historical cost less accumulated
depreciation and impairment losses if any. Cost comprises of the
purchase price and any cost attributable bringing the asset to its
working condition for its intended use

3. Depreciation/ Amortization/ Impairment

a) Depreciation is provided on fixed assets on straight line basis in
accordance with the rates prescribed in Schedule XIV of the Companies
Act 1956.

b) The carrying amounts of assets are reviewed at each balance sheet
date if there is any indication of impairment based on internal and
external factors. An impairment loss is recognized wherever the
carrying amount of assets exceeds its recoverable amount. The
recoverable amount is the greater of the assets net selling price and
the value in use. In assessing value in use the estimated future cash
flows are discounted to their present value at the weighted average
cost of capital

b) No provision has been made in respect of book value and the market
value of the quoted investments. The Directors of the opinion that the
diminution of value of quoted investments is not permanent and there is
estimated appreciation in the value of certain unquoted investments.

5, inventories

The company is in the business of rendering services and hence does not
hold any inventories.

8. Foreign Currency Transactions

a) Transactions in foreign currency are recorded at the rates
prevailing on the date of the transaction.

b) Gain/ loss on exchange due to fluctuation in exchange a rate arising
out of payment / realization during the year has been dealt with in the
Profit and Loss account

c) Monetary assets and liabilities in foreign currency at the balance
sheet date are restated at the exchange rates prevailing at the year
end. Gain/ loss on exchange are deal! with in the Profit and Loss
account

7. Employee Benefits

Contributions to defined contribution schemes such as provident fund
are charged to profit and loss account as incurred. Provision for
Gratuity is made based on estimated accrued liability as at the Balance
Sheet date.

8. Revenue Recognition

Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
readily measured. Income from operations mainly comprises of Income
from the following heads namely International Freight Forwarding,
Customs House Agency works. Warehousing etc. representing the gross
value of services rendered by the company to its customers. Income is
accounted when services are completed in accordance with the contracts
entered into with the customers,

9. Accounting for taxes on income

a) Provision for current tax is made based on the tax payable under the
current provisions of the Income Tax Act 1951. Provision for taxation
on overseas branches (Malaysia) is based on the taxation rates
prevailing in Malaysia.

b) Tax on fringe benefits is measured at the specified rates on the
value of fringe benefits in accordance with the provisions of Section
115VVC of the Income Tax Act, 1981.

c) Deferred tax on timing differences between taxable income and
accounting income is accounted for. using the tax rates and tax laws
enacted as on the Balance Sheet date. ^^^Fr^x

10. Borrowing Cost

Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as a part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for its intended use. All other
borrowing costs are charged to revenue

11. Provisions

a) A provision is recognized when an enterprise has a present
obligation as a result of past event and it is probable that an outflow
of resources will be required to settle the obligation in respect of
which reliable estimates can be made.

b) Provisions are not discounted to its present value and are
determined based on best management estimates required to settle the
obligations at the balance sheet date. These are reviewed at each
balance sheet date and adjusted to reflect the current best management
estimates.

12. Segment Reporting

The company is engaged in only one segment of business which is
International Freight Forwarding and Customs House Agency work the risk
and returns of which are similar.

13. Use of Estimates

The preparation of financial statements in conformity with the
generally accepted accounting principles requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual result and estimates are recognized in the period in
which the results are known/ materialized.

14. Contingencies

Liabilities which are material and whose future outcome cannot be
ascertained with reasonable certainty are treated as contingent and
disclosed by way of Notes to financial statements.